Frozen LGPS Pension - What can I do?
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I don't often agree with ed but can;t see anything wrong with what he said.
The OP is trying to use his pension fund to speculate with, which is not at all wise. The wisest thing may well be to leave it where it is, where it is guaranteed to keep pace with inflation.
This is not my main pension provision, so i am happy to speculate with it - I just can't seem to get at the **** thing!
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EdInvestor wrote: »Look at this way: when you get to retirement what you will want is a guaranteed index linked income to cover your basic costs. That will be made up of your state pension and this LGPS pension.Then you can get all your extra income from your investments safe in the knowledge you won't be in the gutter if it all goes pear shaped.
Ha ha, I think it would still be pear shaped if all I had to fall back on was £15k + pitiful LGPS growthEdInvestor wrote: »In any case if you're such a whizz at investing, acquiring a replacement 15k shouldn't take you too long.
Please don't get me wrong - I'm no whizz and while I've nearly doubled my money over the last 2 years, there wasn't much to start with!0 -
Debtaholic wrote: »My question is:
Is there any way to access the cash value locked into my LGPS pension, which I have not been contributing to since I resigned 2 years ago?
No.Once money is in a pension it can never be taken out.The max cash that can be extracted is 25% of the value from the age of 55.
You can try to do this, but it's likely the SIPP provider will require you to have a recommendation from an IFA to do so, and it's unlikely that an IFA will sign off on it because of the risk you might lose the money and later come back and complain about misselling - a complaint that would be almost certain to succeed.If not, is there any way I can transfer it into a SIPP or some other vehicle that would enable me to have control over its investment?Trying to keep it simple...0 -
Thanks EdInvestor,
This is what I feared - Ah well, I'll just have to wait 30 years, then maybe I can buy a holiday with it!
Can I ask what the benefit of a pension such as LGPS is then? - wouldn't somebody be better contributing to an ISA, unless they are planning to work for the same organisation their whole working life?0 -
Debtaholic wrote: »Can I ask what the benefit of a pension such as LGPS is then?
Ask them for a forecast of what your pension and lump sum will be at retirement age.
The transfer value of 15k doesn;t reflect the value of this type of pension.Trying to keep it simple...0 -
Debtaholic, You need to find an Independent Financial Adviser who has the legally needed qualifications to transact transfers from defined benefit schemes such as yours. No one else is allowed by law to give such advice, and trying to do it along the DIY route is will leave you facing providers who will say they only accept such transfers if they come from an IFA who has conducted a transfer value analysis (TVA) and accompanied it with a report specifically aimed at the individual.
The problem is that many IFA's are not qualified and of those that are a fair amount of them will often say they will not deal with such a transfer (as is the case with Dunstonh) that is not to say transferring is either a good or a bad decision it is because if you claim a missale in the future the odds of it being successful under the current regulatory bodies interpretation of what is and what is not best advice are very high and the liability for that IFA far outweighs any commission or fee he may earn from such business.
You need an IFA who is confident enough enough to conduct a TVA and write a report that is accurate and comprehensive and that his advice is suitable for you your aims and your attitude to investment risk. Every qualified adviser in the country can do that but they all know the regulatory bodies often award compensation for the most stupid of reasons but are afraid to challenge them in a court of law. For a perfect example of that see my post "who are the cowboys?
http://forums.moneysavingexpert.com/showthread.html?t=716315&highlight=who+are+the+cowboys
No IFA should ever say don't transfer without knowing all the facts and without a TVA as to do so is just as likely to land him in it as a complaint of mis selling as all the client need do then is put in a claim not having transfered showing that had he he would have been better off.
To start your search for an IFA look here: http://www.unbiased.co.uk0 -
Re: the tosh Ed came out with....EdInvestor wrote:The transfer value will probably require a high growth rate difficult to meet..
TOSH... Actuaries calculate transfer values. IFA's do a TVA that amongst other things calculates the yield required for a transfer to exceed the preserved pension. IFA's not only use that figure as one of the factors in making a recommendation but also as a check on the actuaries maths. If it's considered high many an IFA has successfully argued the case for the transfer value to be recalculated and seen it subsequently increased.
The ones where the so called "critical yield" to match are high and wont be recalculated often account for the underfunding within the scheme. Local government pension schemes have no such underfunding problems they just up the rates bill we all pay.
I've done lots of transfers albeit the last some 7 years ago from LGPS the critical yield was always reasonable and never exceeded 9% p/a unlike many others and that 9% usually included a reduction in yield of 1.5% or so accounting for the charges within a transfer plan with full commission so the actuary had usually worked on 7.5% as his assumption for future growth.
Nothing excessive there, 7 years ago or today.You can't transfer it to a SIPP now because it is a "contracted out" scheme with 'protected rights' in it, and these can't be put in a SIPP yet - after October they can.
TOSH... LGPS like all final salary schemes don't have protected rights, If they have contracted out they give a guaranteed minimum pension in exchange. This guarantee can be maintained if transfered to a section 32 buyout bond whereas if transfered to a personal pension it's value is thereafter called protected rights.However I think you'll find that any provider will require you to get "permission" from an IFA to move your scheme to a SIPP and that this will not be forthcoming.
TOSH... From some IFA's not all, and it's not "permission" it's as I described in my previous post above
.The reason would be that that the move entails major risks and thus would be seen as misselling....
Tosh...Major risk fo the IFA, Yet more often than not it's best advice for the client. In mineand many other G60 qualified IFA's experience's 100% would and did transfer and improve their lot as long as the transfer value was reasonable.....and not in compliance with regulatory rules.
TOSH...Fully compliant transfers get compensation awarded... as she well knows. She even posted in the thread "Who are the cowboys?"It's not sensible to consider moving a copper bottomed guaranteed zero risk/high benefit Government scheme into a SIPP and taking on the risk of matching its benefits yourself, even if you are an experienced long term investor.
TOSH... It's neither guaranteed, zero risk or high benefit.
If any FSS were guaranteed why did the government come up with the PPF?
The risk is obvious, benefits will rise by 5% p/a at most. If THE RPI exceed that it's guaranteed to do down in value.
There are other risks too for example the death benefits: 15000 if transfered today compared with what? a refund of contributions. Not even comparable even if the return of contributions include interest.
If it were high benefit how come to get the maximum out you have to be a paying member for 40 years. High benefit schemes can provide the same maximum in 10 years (might be 15 I dont honestly remember but it's a long way short of 40 for sure)
You dont need to be an experienced investor you just need the advice of an experienced IFA.
And then she wemt on....The transfer value of 15k doesn;t reflect the value of this type of pension.
Spoken of course as the armchair expert she is. We dont even know what the preserved pension is yet she comes up with the results of her comparison. Like I said the stupid cow in the field knows as much about transfers as she does.
As for the sexist pig comment.. Yes I suppose I am a sexist if this were a conversation in a pub I'll call her a stupid cow but if it were a bloke I'd call him far worse.0 -
Retired_I.F.A. wrote: »Spoken of course as the armchair expert she is. We dont even know what the preserved pension is yet she comes up with the results of her comparison. Like I said the stupid cow in the field knows as much about transfers as she does.
As for the sexist pig comment.. Yes I suppose I am a sexist if this were a conversation in a pub I'll call her a stupid cow but if it were a bloke I'd call him far worse.
Blimey. Remind me not to start any conversations about pension transfers down your local. :rotfl:0 -
Why waste the OP's time Retired IFA with yet more outdated "advice"?
You know very well she will never find an IFA who will recommend she moves her guaranteed Government final salary pension scheme to a SIPP where she can invest in high risk commodities.The whole idea is a joke in the current environment.
OH and BTW since you retired we have developed a slightly different style of economy featuring low inflation and low interest rates.
I'm afraid 9% is not any longer regarded as an acceptable critical yield.Trying to keep it simple...0 -
EdInvestor wrote: »Why waste the OP's time Retired IFA with yet more outdated "advice"?
Nothing I've said above is outdated, factually wrong or misleading and my only advice "find an IFA" is quite legal. Pity you cant say that Ed.You know very well she will never find an IFA who will recommend she moves her guaranteed Government final salary pension scheme to a SIPP where she can invest in high risk commodities.The whole idea is a joke in the current environment.
I'll point her to one who conducts transfers from final salary schemes and posts on this site if she wants, and with a few phone calls I've no doubt I could find quite a few. There are less around now undoubtedly but there are still many who have the confidence in their own knowledge and report writing to transact such.OH and BTW since you retired we have developed a slightly different style of economy featuring low inflation and low interest rates. I'm afraid 9% is not any longer regarded as an acceptable critical yield.
The "critical yield is but one of many factors as you might have learned had you read what I said in other threads to which you "contributed". The only one needed to decide if it's acceptable or not is the one whose money it belongs to. An IFA can submit the proposal formto transfer without recommending it, nothing has changed there at all.
The 9% mentioned may well be lower now, as the bulk of it, 7.5% as I said was the actuary's assumption to future investment growth 6 years ago today that same actuary may have a lower figure in mind lets say 6.5% combine that with the lower charges of modern personal plans and one could well be looking at a "critical" yield of 7% from a TVA. well within the "think of a yield as a rule of thumb about 5% above the rate of inflation for long term growth" the PIA used to often say (same people today in the same job at the FSO nothing different again but for a job title)
When interest rates are low it follows that assumptions for future investment growth likewise is low which equates to a high transfer value. When rates are high future investment assumption are high too and then it equates to a low transfer value.0
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